Statement: Decision on reforming the switching of …...Consumer switching Decision on reforming the switching of mobile communication services 2 Package of reforms 1. Introduction

STATEMENT

Publication Date: 19 December 2017

Consumer switching

Decision on reforming the switching of mobile communication services NON-CONFIDENTIAL VERSION

About this document Consumers need to be able to switch providers easily to exercise choice and take advantage of competition in the communications sector.

We have identified unnecessary difficulties that many consumers experience when they switch or consider switching mobile provider.

This document sets out our decision to address these difficulties by reforming the process for switching mobile provider, removing requirements on consumers to pay for their old service during a notice period once they have switched provider, and ensuring consumers are better informed about switching.

Contents

Section

1. Summary 1

2. Introduction 4

3. Consumer harm under current switching arrangements 16

4. Reforms to mobile switching 39

5. Conclusions on introducing mobile switching reform 63

Annex

A1. Glossary 79

Consumer switching Decision on reforming the switching of mobile communication services

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1. Summary Mobile switching can be unnecessarily difficult

1.1 We want to ensure that consumers do not experience unnecessary difficulties when switching mobile provider. Consumers should be able to exercise choice and take advantage of competition in communications markets by being able to switch provider easily. Unnecessary difficulties can give rise to consumers suffering harm, making switching difficult or preventing it entirely in some cases.

1.2 We asked consumers about their experiences of switching mobile services. We found that a quarter of those who switch mobile provider – equivalent to around 1.7 million – had experienced major difficulties with the process.1 These difficulties also affected 37% of consumers who had considered switching but did not do so.2 We recognise that many consumers who have switched mobile providers found the process easy. However, we are concerned that there is a significant minority of consumers who either find the process difficult or are deterred from switching.

1.3 We have identified three sources of concern for consumers:

• some experienced difficulties when contacting their existing provider to transfer (port) their number or cancel their old service, including unwanted attempts from their provider to persuade them to stay;

• many mobile switchers found themselves paying notice period charges for their old service weeks after they had switched, which amounts to around £10 million per year in unwanted double-payments; and

• some consumers experienced short-term loss of service when switching.

Our reforms will make mobile switching quicker and easier

1.4 We have previously consulted on proposals to address these concerns and make mobile switching easier. 3 Based on our analysis and responses to our consultations, we have decided on the following package of reforms:

1 BDRC 2015 consumer research, adults 16+ who switched in the 18 months prior to research. 2 BDRC 2015, adults 16+ who considered switching in the 12 months prior to research. 3 We consulted on reforming mobile switching arrangements in March 2016, July 2016 and May 2017. These consultations can be found here: March 2016 https://www.ofcom.org.uk/consultations-and-statements/category-1/consumer-switching-mobile July 2016 https://www.ofcom.org.uk/consultations-and-statements/category-2/mobile-switching-jul16 May 2017 https://www.ofcom.org.uk/consultations-and-statements/category-2/consumer-switching-proposals-to-reform-switching-of-mobile-communications-services

https://www.ofcom.org.uk/consultations-and-statements/category-1/consumer-switching-mobilehttps://www.ofcom.org.uk/consultations-and-statements/category-2/mobile-switching-jul16https://www.ofcom.org.uk/consultations-and-statements/category-2/consumer-switching-proposals-to-reform-switching-of-mobile-communications-serviceshttps://www.ofcom.org.uk/consultations-and-statements/category-2/consumer-switching-proposals-to-reform-switching-of-mobile-communications-services


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Package of reforms

1. Introduction of a new and simplified way to switch (‘Auto-Switch’): consumers will be able to request and automatically receive a unique code by text, or through their online account, which they can give to their new provider to switch and port their number (if they wish to do so). This will remove the need for consumers to call their old provider.

2. Banning notice period charges after the switching date: consumers will no longer have to pay for their old and new service at the same time.

3. Providing clear information to consumers: mobile providers will be required to provide consumers with clear information, for example on their websites, about the switching and number porting process.

1.5 Our Auto-Switch reform allows consumers to control the contact they have with their existing provider when they are looking to move away from them, including avoiding having a phone conversation if they do not want one. Additionally, consumers will only need to contact their new provider once – to transfer their existing number or cancel their old service. After doing this, the number transfer or cancellation occurs automatically, and the new service starts.

1.6 Prohibiting mobile operators from charging consumers for notice periods once they have switched provider will ensure people do not have to pay for a service they no longer use after the date they switch. It will also make it easier to switch without worrying about notice periods.

1.7 Requiring mobile providers to supply consumers with clear information will ensure people are better informed about the switching process and will be less likely to be put off from switching because of uncertainties about how to do it.

1.8 This simpler switching process will be available to all mobile customers regardless of whether they:

• wish to keep their existing mobile number when moving to their new provider or not (known as “porting” their number);

• are seeking to port a single number, or multiple numbers (or switch a single account or multiple accounts in cases where they do not want to port their number); and

• are residential or business customers.

1.9 In relation to loss of service, industry is implementing initiatives to address this on a voluntary basis. We are satisfied that these initiatives are sufficient to address our concerns, and do not therefore consider it would be appropriate to impose regulation. We will monitor their effectiveness and revisit the issue in the future if necessary.


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Effective and proportionate reforms

1.10 We consider that together these reforms will substantially benefit consumers by addressing the unnecessary difficulties and deterrents they face when switching. We also expect easier switching to deliver other important benefits to consumers more generally, as more consumers engage in the market which in turn will encourage greater competition between providers.

1.11 We have considered the expected benefits of these reforms and their likely impact on providers. In our judgment, the package of reforms is a proportionate means of achieving our objective of removing unnecessary difficulties when switching mobile provider and ensuring a switching process that is quick, simple, and convenient to use.

1.12 The Government has made clear its commitment to improving switching, which is reflected in the Digital Economy Act. Our reforms support this commitment.

1.13 We require these reforms to be in place within a reasonable implementation period, and no later than 1 July 2019.


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2. Introduction 2.1 Around 5 million UK consumers currently switch mobile provider each year, and of these,

around 3.2 million also keep their existing mobile number when they switch provider.4

2.2 We have found that under current switching arrangements, consumers – including small businesses – can experience difficulties, service interruptions, or incur unnecessary costs when switching. These issues fall into three main categories:

• Unnecessary time and difficulties progressing the switch, in particular as a result of consumers needing to contact their existing provider to request a PAC5 and/or cancel.

• ‘Double paying’ while switching provider, because of providers’ requirements for consumers to pay out notice periods when cancelling a mobile service, even where that service is no longer being provided.

• Loss of service while switching provider, for example because the consumer must coordinate the switch (start and stop dates), and this does not go to plan, and/or because of service disruption during the porting process.

2.3 We also found that the risk of experiencing these difficulties was having the practical effect of deterring some consumers from switching altogether.

2.4 We consulted on proposals to address these harms in a number of previous consultations.6 This section explains current mobile switching processes and briefly describes the switching proposals set out in our March 2016 and July 2016 consultations and our final proposals set out in the May 2017 consultation. It concludes by setting out our regulatory policy objectives and the legal framework under which our proposals were framed and our decision in this document is made.

4 Based on data from Syniverse which showed that there were 3.23 million non-bulk (i.e. fewer than 25 numbers) PAC switches between October 2015 and September 2016. This figure is for total non-bulk ports and was not restricted to adults only. According to our BDRC 2016 omnibus data, 63% of switchers ported their number and 37% did not keep their number (figures for adults 16+). These numbers therefore suggest that the total number of switchers was 5.12 million (3.23/0.63). Our 2017 Switching Tracker, which reflects switching numbers among those aged 16+, similarly found that in the 12 months to August/September 2017, 60% of mobile switchers ported their number and 40% did not. 5 At present a consumer wanting to port his or her number would need to request a PAC (Porting Authorisation Code) from their current provider to switch their mobile service. Most providers require that consumers call in and speak to a service agent to request this. 6 See: https://www.ofcom.org.uk/__data/assets/pdf_file/0013/102037/Proposals-to-reform-switching-of-mobile-communications-services.pdf. We refer to this document as the ‘May 2017 consultation’. We also published previous consultations in March 2016 (https://www.ofcom.org.uk/__data/assets/pdf_file/0025/82636/consumer-switching-mobile-consultation.pdf) and July 2016 (https://www.ofcom.org.uk/__data/assets/pdf_file/0023/83453/Consumer-Switching-Further-proposals-to-reform-switching-of-mobile-services-July-2016.pdf). We refer in these documents as the ‘March 2016 consultation’ and the ‘July 2016 consultation’.

https://www.ofcom.org.uk/__data/assets/pdf_file/0013/102037/Proposals-to-reform-switching-of-mobile-communications-services.pdfhttps://www.ofcom.org.uk/__data/assets/pdf_file/0013/102037/Proposals-to-reform-switching-of-mobile-communications-services.pdfhttps://www.ofcom.org.uk/__data/assets/pdf_file/0025/82636/consumer-switching-mobile-consultation.pdfhttps://www.ofcom.org.uk/__data/assets/pdf_file/0025/82636/consumer-switching-mobile-consultation.pdfhttps://www.ofcom.org.uk/__data/assets/pdf_file/0023/83453/Consumer-Switching-Further-proposals-to-reform-switching-of-mobile-services-July-2016.pdfhttps://www.ofcom.org.uk/__data/assets/pdf_file/0023/83453/Consumer-Switching-Further-proposals-to-reform-switching-of-mobile-services-July-2016.pdf


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Current mobile switching routes

2.5 Consumers currently seeking to switch mobile provider must follow either the ‘PAC’ process, or use the default ‘Cease & Re-provide’ (‘C&R’) approach.7

PAC process

2.6 The ‘PAC’ process must be used by consumers who wish to switch their provider and keep, or ‘port’, their number.

2.7 Figure 1 summarises the steps a consumer must follow when switching and porting using the current PAC process. Figure 2 describes the PAC process in more detail.

Figure 1: Consumer steps for mobile switching and porting under the current PAC process

7 Our previous consultations described in detail these processes for switching and how, under the PAC process, consumers can transfer over their existing mobile number to their new provider. They also described how loss of service might occur in a switching context, as well as how double paying, as a result of notice period requirements, might arise (March 2016 consultation Section 3, July 2016 consultation §3.4 - §3.6, and §3.18 - §3.19, and May 2017 consultation §2.4-§2.15).


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Figure 2: PAC process in detail

The consumer requests a PAC from their old provider

If the consumer contacts their existing (losing) provider8 by phone9 to request a PAC, Ofcom regulations require that the PAC is given immediately over the phone or within two hours by text.10 The PAC is valid for 30 days.

The consumer gives their PAC to their new provider

When the consumer signs up to a new service with their new (gaining) provider,11 the consumer will normally receive a new SIM card from the gaining provider with a temporary number, which they can use to make and receive calls and texts prior to the port of their existing number.12 When the consumer receives their PAC from the losing provider, they port their existing mobile number over to their new service by giving the PAC to their gaining provider. Ofcom regulations require that providers port the mobile number within one business day of the consumer’s request.

The existing number is transferred to the new service

Following completion of the port, the temporary number on the consumer’s new service will be replaced by the ported number and the old service will be automatically deactivated.

2.8 The consumer is responsible for coordinating the end of the old and the start of the new service. Notice period policies differ between providers,13 but where notice periods apply, a consumer wishing to avoid overlapping services and ‘double paying’ must coordinate the end of the notice period with the start date of the new service and the transfer of their existing number.14 This might involve the consumer deferring the start of the new service until any notice period for the old service has expired. If a consumer is unable to co-ordinate the process, they may pay for both their old and new service at the same time.

Cease & Re-provide (C&R) process

2.9 Where the consumer wants to switch provider but not port their number, currently no formal process exists to achieve the switch. Instead the consumer must follow a default process involving the consumer contacting their losing provider to cancel their old service, including giving any required notice. The consumer must separately contact their gaining provider to take out a new service.

2.10 As with the PAC process, under this approach the consumer is responsible for coordinating the end of the old and the start of the new service. C&R switchers can avoid overlapping services and ‘double paying’ by coordinating the end of the notice period with the start date of the new service, but this might involve the consumer deferring the start of the new

8 We referred to the losing provider as ‘LP’ in previous consultations. 9 Some providers also allow a consumer to request the PAC via webchat or email. 10 By ‘text’ we refer to SMS text throughout this document. 11 We referred to a consumer’s new provider or the provider they are joining as the ‘Gaining Provider’ (‘GP’) in previous consultations. 12 The consumer is billed by the gaining provider from the date of SIM activation. 13 Some providers charge 30 days’ notice from the day the PAC is requested, some charge this from the day the PAC is used (the day of the number port), and others do not charge for notice once a number port has taken place. These different approaches are set out in footnote 120. 14 In some circumstances, it may not be possible to avoid some double paying where a provider charges notice from the day the PAC is used, unless the consumer knows they have to give notice in advance of redeeming the PAC.


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service until any notice period for the old service has expired. If a consumer is unable to co-ordinate the process, they may pay for both their old and new service at the same time, or they may end up with no service for a period of time.

2.11 Figure 3 summarises the steps a consumer takes when switching through the C&R method.

Figure 3: Consumer steps for mobile switching via Cease and Re-provide

The 2016 consultation proposals

2.12 In our March 2016 consultation, we set out our view15 that a sizeable minority of mobile switchers experience harm when switching, under both the current PAC process and the C&R route, as a consequence of unnecessary time spent and difficulties encountered during the switching process, double paying, and loss of service while switching provider.

2.13 In our July 2016 consultation16 we provided further analysis on the effects notice period requirements can have on consumers when applied in a switching context, and concluded that many consumers experience difficulties when switching, where notice periods apply, regardless of the switching process (i.e. whether PAC or C&R).

2.14 To address the harms we had identified, we proposed two options for reforming the core mobile switching process:

15 Based on consumer research conducted by BDRC (BDRC 2015 research) https://www.ofcom.org.uk/__data/assets/pdf_file/0025/91834/mobile_switching_quantitative_research_feb16.pdf 16 July 2016 consultation Section 3, in particular §3.7 to §3.28

https://www.ofcom.org.uk/__data/assets/pdf_file/0025/91834/mobile_switching_quantitative_research_feb16.pdf


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• Gaining Provider Led (GPL) process - under this proposal, consumers would only need to contact the provider they want to switch their service to i.e. they would not need to contact their losing provider if they did not want to. The gaining provider would arrange for the consumer to be sent a text message containing information relevant to their switching decision e.g. any early termination charges (ETCs).

• Auto-PAC - under this proposal, consumers would be able to request a PAC and have it delivered by text, or through an online account, in addition to being able to request and receive it over the phone. The message containing the PAC would also contain information relevant to their switching decision, such as any ETCs.17

2.15 Across our consultations we also set out proposals for two accompanying measures aimed at addressing the harms identified:

• A requirement on providers not to charge notice beyond the date on which a consumer switches.18

• End-to-end management - we proposed that the switching process should be centrally coordinated, which would ensure that a consumer’s new service would start before the old one was deactivated. This was aimed at avoiding any potential loss of service when porting.

2.16 We also said that it would potentially be helpful to require providers to give consumers clear guidance on the switching and porting process. We suggested that, in discussion with Ofcom and other interested parties, industry would be best placed to develop this guidance.

2.17 In the 2016 consultations, we set out a marginal preference for the GPL option over Auto-PAC, on the basis that we considered GPL to be simpler for consumers as it did not require them to obtain a PAC. We were also of the view that the higher costs of implementation of the GPL option were justified in light of the additional consumer benefits we considered it would bring.

May 2017 consultation proposals

2.18 Following responses to our March and July 2016 consultations, we undertook further work to understand the likely costs to industry of implementing our reform options.19 We also commissioned further consumer research (BDRC 2017 research)20 and gathered additional evidence concerning switchers’ experiences of current processes as well as their views on the two reform options we proposed (GPL or Auto-Switch (a revised version of Auto-PAC

17 These are charges that may be payable by a consumer for the termination of a contract before the end of any minimum contract period 18 This proposal was first set out in our July 2016 consultation. 19 In January 2017, we published an update on our estimate of the likely gross implementation costs of our proposed reforms and invited stakeholders and interested parties to comment. 20 https://www.ofcom.org.uk/__data/assets/pdf_file/0026/101996/Mobile-Switching-Research-2017-Attitudes-towards-current-and-potential-alternative-processes.pdf

https://www.ofcom.org.uk/__data/assets/pdf_file/0026/101996/Mobile-Switching-Research-2017-Attitudes-towards-current-and-potential-alternative-processes.pdfhttps://www.ofcom.org.uk/__data/assets/pdf_file/0026/101996/Mobile-Switching-Research-2017-Attitudes-towards-current-and-potential-alternative-processes.pdf


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which would also include consumers who wanted to switch without porting their number)).21 22

2.19 Our updated analysis supported our view, as set out in previous consultations, that a significant number of switchers experience difficulties when switching. It also suggested that consumers place significant value on the likely reduction in time and difficulties offered by both the Auto-Switch and GPL options. In particular, both options enabled consumers to avoid having to speak with their previous provider – the key factor behind the time spent and difficulties experienced by consumers under the current arrangements.

2.20 In the May 2017 consultation we also said that, partly as a result of information provided by stakeholders in response to previous consultations, our estimates of the costs of implementing these reforms had risen, and significantly in the case of GPL. We were therefore of the view that Auto-Switch was a more proportionate remedy to address the problems we had identified as it would meet our policy objectives but at a lower cost than GPL. Additionally, we were also of the view that the “LP-variant” of Auto-Switch, under which consumers can make PAC/N-PAC requests directly with losing providers (rather than the “CPS variant” under which consumers would make requests to the Central Porting Service (CPS)) was also more proportionate.

2.21 In relation to loss of service, we acknowledged that industry had made commitments to develop and implement measures to address loss of service on a voluntary basis which we were satisfied were sufficient to adequately address our concerns, subject to sufficient progress being made.23 Thus, we no longer felt it to be proportionate to impose regulation regarding loss of service (for instance, through end-to-end management). However, we said that our final view on industry commitments, and whether they sufficiently delivered against our policy objectives, would depend on the progress industry made in delivering an improved porting process.

2.22 Our May 2017 consultation therefore proposed the following package of reforms as our preferred option:

• introduction of Auto-Switch; • prohibiting charging for notice after the switching date; and • providing transparency to consumers.

21 Auto-Switch is described in detail in Figure 5 in Section 4. 22 We also took into account data from: Ofcom’ Switching Tracker 2016 (Data tables available online https://www.ofcom.org.uk/__data/assets/pdf_file/0031/98536/Switching-Tracker-2016-Revised-definitions-for-standalone-services-Mar2017.pdf); updated data on complaints received by Ofcom concerning changing mobile provider; further consumer research results concerning loss of service experienced by consumers when they switch mobile provider (BDRC omnibus December 2016 https://www.ofcom.org.uk/__data/assets/pdf_file/0025/101995/Mobile-Switching-Research-2017-Omnibus-data-tables.pdf); data on the incidence of number ports taking place within on business day; and our SME Tracker 2016, which examines small businesses’ experience of communications services (See: https://www.ofcom.org.uk/research-and-data/multi-sector-research/general-communications/consumer-experience/sme-research. The scope of reforms covers both residential consumers and businesses, where they are switching fewer than 25 mobile numbers (i.e. excluding “bulk ports” which we defined to be 25 numbers or more.) 23 These measures are set out in §4.7

https://www.ofcom.org.uk/__data/assets/pdf_file/0031/98536/Switching-Tracker-2016-Revised-definitions-for-standalone-services-Mar2017.pdfhttps://www.ofcom.org.uk/__data/assets/pdf_file/0031/98536/Switching-Tracker-2016-Revised-definitions-for-standalone-services-Mar2017.pdfhttps://www.ofcom.org.uk/__data/assets/pdf_file/0025/101995/Mobile-Switching-Research-2017-Omnibus-data-tables.pdfhttps://www.ofcom.org.uk/__data/assets/pdf_file/0025/101995/Mobile-Switching-Research-2017-Omnibus-data-tables.pdfhttps://www.ofcom.org.uk/research-and-data/multi-sector-research/general-communications/consumer-experience/sme-researchhttps://www.ofcom.org.uk/research-and-data/multi-sector-research/general-communications/consumer-experience/sme-research


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Summary of stakeholder responses to the May 2017 consultation

2.23 We received 21 responses to our May 2017 consultation.24 Respondents included consumer groups, communications providers and individuals.

2.24 In response to our consultation, consumer groups and individual respondents generally agreed with our assessment of consumer harms arising from the current switching arrangements, while responses from mobile providers were mixed. In addition, many respondents agreed with our preference for Auto-Switch, including [], Virgin and the Communications Consumer Panel and Advisory Committee on Older and Disabled people (CCP/ACOD), as well as all individual respondents.25

2.25 Others, however, disagreed with our preference for Auto-Switch over GPL, and argued that GPL is a more effective solution to address the consumer harms we had identified, including SSE and uSwitch. TalkTalk and Three also expressed a preference for GPL reform, but nevertheless recognised that Auto-Switch would be an improvement on current mobile switching arrangements. [] said that their preferred model would be a harmonised switching process across the telecommunications industry.26

2.26 In addition, a number of mobile operators (BT/EE, O2 and Vodafone) criticised our analysis on the need for intervention and disagreed with our proposals for reform overall. BT/EE and Vodafone also put forward a voluntary code of practice on switching for the mobile industry, which they argued should be adopted in place of reform. This proposal is discussed further in paragraphs 4.17 to 4.22.

2.27 We do not consider that responses to our May consultation raised points which mean we should change our preference for Auto-Switch over GPL. The rest of this statement therefore focuses on Auto-Switch. Specific stakeholder comments on GPL and our response to those are discussed separately in Annex 9.

2.28 Stakeholder responses concerning our assessment of harm and the need for intervention, our package of reforms (Auto-Switch proposal, notice period reform and transparency requirements) and our assessment of the proportionality of our intervention are discussed in the following sections and more fully in the annexes to this document.

Our regulatory policy objective on mobile switching

2.29 It is important that consumers do not experience unnecessary difficulties when switching mobile provider and are not deterred from switching because of the process. The ability of consumers to switch easily to their preferred provider, or away from a provider they are dissatisfied with, ensures better outcomes for consumers, and means they can best

24 Non-confidential responses are published on our websites here: https://www.ofcom.org.uk/consultations-and-statements/category-2/consumer-switching-proposals-to-reform-switching-of-mobile-communications-services 25 We received 10 responses from individuals, all of whom agreed with our preference for Auto-Switch. 26 For our decision on cross platform switching for landline, broadband and pay TV services, please see our July 2017 statement: https://www.ofcom.org.uk/__data/assets/pdf_file/0013/104503/Decision-on-switching-between-platforms.pdf

https://www.ofcom.org.uk/consultations-and-statements/category-2/consumer-switching-proposals-to-reform-switching-of-mobile-communications-serviceshttps://www.ofcom.org.uk/consultations-and-statements/category-2/consumer-switching-proposals-to-reform-switching-of-mobile-communications-serviceshttps://www.ofcom.org.uk/__data/assets/pdf_file/0013/104503/Decision-on-switching-between-platforms.pdfhttps://www.ofcom.org.uk/__data/assets/pdf_file/0013/104503/Decision-on-switching-between-platforms.pdf


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exercise choice and take advantage of competition in communications markets. It is also a key enabler of effective competition, which in turn underpins the provision of good value, high quality products, and drives innovation.

2.30 Our regulatory policy objective, in light of our statutory duties, is to ensure that switching arrangements do not cause consumer harm by creating unnecessary difficulties or deterrents for consumers when switching mobile provider. Removing unnecessary difficulties or deterrents that give rise to consumer harm should result in a switching process that is quick, simple and convenient to use.

2.31 Government has made clear its commitment to improving switching by introducing legislation in the Digital Economy Act 2017 to make explicit Ofcom’s powers in relation to switching.

Legal framework

2.32 Our objectives are based on a number of provisions of the Communications Act 2003 ("the Act”) and on the European common regulatory framework for electronic communications services ("the Framework”) which comprises a number of specific Directives and which is implemented by the Act.

Ofcom’s general duties

2.33 Section 3(1) of the Act states:

“It shall be the principal duty of Ofcom, in carrying out their functions:

a) to further the interests of citizens in relation to communication matters; and

b) to further the interests of consumers27 in relevant markets, where appropriate by promoting competition.”

2.34 Section 3(2) goes on to set out things which the duty in section 3(1) requires us to secure when carrying out our functions. These include securing the availability throughout the UK of a wide range of electronic communications services (section 3(2)(b)). We are also required to have regard to the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed, as well as any other principles appearing to Ofcom to represent best regulatory practice (section 3(3)).

2.35 Section 3(4) says we must have regard, in performing our duties, to a number of matters28 including:

• the desirability of promoting competition;

27 Consumer is defined in Section 405(5) of the Act and includes people acting in their personal capacity or for the purposes of, or in connection with, a business. 28 As they appear to us to be relevant in the circumstances.


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• the opinions of consumers in relevant markets and of members of the public generally; and

• the extent to which the furthering or securing of the matters mentioned in sections 3(1) and 3(2) is reasonably practicable.

2.36 In addition, section 3(5) requires that, when performing our duty to further the interests of consumers, Ofcom must have regard, in particular, to the interests of those consumers in respect of choice, price, quality of service and value for money.

European requirements for regulation

2.37 As set out in section 4 of the Act, when exercising certain functions29 Ofcom must also act in accordance with the six European Community requirements described there. These include promoting competition in the provision of electronic communications networks and services, and the interests of all EU citizens, while being technologically neutral.

2.38 The requirements of section 4 are read in light of Article 8 of the Framework Directive30 which sets out the policy objectives of the Framework. It says national regulatory authorities shall ensure that, when they carry out the regulatory tasks set out in the Framework, they take all reasonable and proportionate measures aimed at achieving specific objectives.31 Those objectives include:

• the promotion of competition in the provision of electronic communications services32 by ensuring that:

- users derive maximum benefit in terms of choice, price and quality; and - there is no distortion or restriction of competition in the electronic

communications sector, including the transmission of content.33

• to promote the interests of EU citizens by ensuring:

- a high level of protection for consumers in their dealings with suppliers; and - promoting the provision of clear information (in particular, requiring transparency

of tariffs and conditions for using publicly available electronic communications services).34

Powers and duties under the Framework in relation to general conditions

2.39 We will implement our decision to make switching mobile providers easier by introducing consumer protection rules in the form of general conditions (“GCs”).

29 Including those whose exercise we propose in this document. 30 Directive 2002/20/EC of the European Parliament and of the Council (as amended by Directive 2009/140/EC), 7 March 2002. Available at: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2002:108:0033:0033:EN:PDF 31 Set out in paragraphs 2, 3 and 4 of Article 8. 32 As well as electronic communications networks and associated facilities and services. 33 Articles 8(2)(a) and (b). 34 Articles 8(4)(b) and (d).

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2002:108:0033:0033:EN:PDF


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2.40 Alongside the Framework Directive, the Authorisation Directive35 provides for national regulatory authorities to set conditions of general authorisation for communications providers. Under Article 6, and paragraph 8 of the Annex, these include conditions containing “…. consumer protection rules specific to the electronic communications sector, including conditions in conformity with Directive 2002/22/EC” (“Universal Service Directive”).”

2.41 The Universal Service Directive concerns the provision of electronic communications networks and services to end-users and, amongst other things, establishes the rights of end-users and the corresponding obligations of providers of publicly available electronic communications services and networks.36 In this context, Article 30 of the Universal Services Directive37 and Recital 47 to the 2009 Directive which amended it are particularly relevant.38 The latter states:

“In order to take full advantage of the competitive environment, consumers should be able to make informed choices and to change providers when it is in their interests. It is essential to ensure that they can do so without being hindered by legal, technical or practical obstacles, including contractual conditions, procedures, charges and so on. This does not preclude the imposition of reasonable minimum contractual periods in consumer contracts…..... Experience in certain Member States has shown that there is a risk of consumers being switched to another provider without having given their consent. While that is a matter that should primarily be addressed by law enforcement authorities, Member States should be able to impose such minimum proportionate measures regarding the switching process, including appropriate sanctions, as are necessary to minimise such risks, and to ensure that consumers are protected throughout the switching process without making the switching process less attractive for them.”

2.42 Article 30 of the Universal Service Directive includes provisions dealing with the porting of numbers and the switching of providers. It says national regulatory authorities should take into account, where necessary, measures ensuring that:

• subscribers are protected throughout the switching process; and • subscribers are not switched to another provider against their will.

2.43 It also states that, “[w]ithout prejudice to any minimum contractual period, Member States shall ensure that conditions and procedures for contract termination do not act as a disincentive against changing provider”.

35 Directive 2002/20/EC of the European Parliament and of the Council (as amended by Directive 2009/140/EC), paragraph 8 of Annex A 36 See Articles 1(1) and (2). 37 Directive 2002/22/EC of the European Parliament and of the Council (as amended by Directive 2009/136/EC), 7 March 2002. Available at: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2002:108:0051:0051:EN:PDF 38 Directive 2009/136/EC of the European Parliament and of the Council, available at http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32009L0136&from=EN

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Powers to set General Conditions under the Act

2.44 Section 45 of the Act says we may set General Conditions which contain provisions authorised or required by one or more of sections 51, 52, 57, 58 or 64. Section 47(2) governs the circumstances in which Ofcom can set or modify a General Condition. It states that a condition can be made or modified where doing so is:

• objectively justifiable in relation to the networks, services, facilities, apparatus or directories to which it relates;39

• not such as to discriminate unduly against particular persons or against a particular description of persons;

• proportionate to what the condition or modification is intended to achieve; and • transparent in relation to what it is intended to achieve.

2.45 Under Section 51(1)(a) the General Conditions we may make include conditions making such provision as we consider appropriate for the purpose of protecting the interests of end-users of public electronic communications services. Section 51(2) says this power includes (but is not limited to) setting conditions for that purpose which:

• relate to the supply, provision or making available of goods, services or facilities associated with the provision of public electronic communications services;

• give effect to EU obligations to provide protection for such end-users in relation to the supply, provision or making available of those goods, services or facilities;

• ensure that conditions and procedures for the termination of a contract do not act as a disincentive to an end-user changing communications provider;

• require the provision, free of charge, of specified information, or information of a specified kind, to end-users; and

• specify requirements in relation to arrangements that enable an end-user to change communications provider on request.

2.46 We set out in this statement how our decision accords with our powers and duties, including meeting the relevant tests.

Impact Assessment

2.47 The analysis presented in the March 2016, July 2016 and May 2017 consultations constituted an impact assessment as defined in section 7 of the Act. In this document, in particular in Annex 4, we update our analysis in relation to the impact assessment set out in our May 2017 consultation, to the extent we consider appropriate in light of the responses to that consultation.40

39 Section 47(3) says this does not apply to the setting of a condition. We are likely, however, to take it into account as part of our assessment of whether any condition is proportionate. 40 For further information about our approach to impact assessments, see the guidelines, “Better policy-making: Ofcom’s approach to impact assessment” (https://www.ofcom.org.uk/__data/assets/pdf_file/0026/57194/better_policy_making.pdf)

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2.48 Impact assessments provide a valuable way of assessing different options for regulation and showing why the preferred option was chosen. They form part of best practice policy-making.

Equality impact assessment

2.49 Ofcom is also required to assess the potential impact of all our functions, policies, projects and practices on the equality of individuals to whom these policies will apply. Equality impact assessments (‘EIAs’) assist us in making sure that we are meeting our principal duty of furthering the interests of citizens and consumers regardless of their background or identity.

2.50 We have given careful consideration to whether or not the decision contained in this document will have a particular impact on race, age, disability, gender, pregnancy and maternity, religion or sex equality. We do not envisage however, that our decision would have a detrimental impact on any particular group of people.

This document

2.51 This document sets out an overview of our decision and the reasons for it. It should be read together with the Annexes to this document, which contain further detailed reasoning and which form part of our decision. The remainder of this document is structured as follows:

• Section 3 sets out our judgement on consumer harm arising from current switching arrangements;

• Section 4 sets out the reforms to current mobile switching arrangements and how these will work;

• Section 5 sets out our conclusion on introducing mobile switching reform; and • Annex 1 contains a glossary of terms.

2.52 The separate document of further annexes is structured as follows:

• Annex 2 sets our Auto-Switch process reform in more detail; • Annex 3 describes our cost methodology; • Annex 4 updates the impact assessment for our package of reforms; • Annexes 5 to 8 provides the supporting calculations to the impact assessment including

time savings, double paying, willingness to pay and benefits to non-switchers; • Annex 9 sets out consultation responses on GPL; and • Annexes 10 and 11 set out the modifications to the General Conditions.


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3. Consumer harm under current switching arrangements Introduction

3.1 This section sets out our views of the harm that consumers, including businesses, can experience when switching mobile providers. We also summarise our provisional views from previous consultations, and set out stakeholders’ responses to the May 2017 consultation.

Previous consultations

3.2 In our consultations we set out that a quarter of consumers who switch mobile provider - equivalent to around 1.7 million consumers41 - had experienced major difficulties with the current switching process. We also set out that 37% of consumers who had actively considered switching but did not do so, said that these difficulties were a major factor in their decision not to switch.42 We recognised that most consumers who have switched mobile providers found the process easy, but stated that we were concerned there was a significant minority of consumers who were either finding the process difficult or were deterred from switching.

3.3 We provisionally concluded that consumers switching mobile provider can suffer harm from unnecessary time spent and difficulties encountered during the process, double paying (namely paying for their old and new service at the same time) and loss of service. On that basis we provisionally concluded that intervention was appropriate to address these harms.

Consumers suffer harm from unnecessary time spent and difficulties encountered while progressing a switch

3.4 In our May 2017 consultation we said that current switching processes can lead to unnecessary time spent and difficulties for consumers when switching, and can deter some consumers from switching. In particular, we set out that:

• requesting and obtaining a PAC and porting a mobile number can be difficult and time consuming, including where the consumer encounters unwanted persuasion to remain;

• cancelling the old service and contacting the losing provider can be difficult for both PAC and C&R switchers, including where the consumer encounters unwanted persuasion to remain; and

• such difficulties can deter consumers from switching.

41 BDRC 2015. Figure for adults 16+ who switched mobile provider in the 18 months prior to research 42 BDRC 2015. Figure for adults 16+ who considered switching mobile provider in the 12 months prior to research


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3.5 We said our conclusions also applied to small and medium sized enterprises (SMEs), on the basis that the majority of SMEs purchase and use mobile services in ways that substantially resemble those of residential consumers, and that a significant number can spend unnecessary time and experience difficulties when switching.

3.6 We also relied on our BDRC 2017 research which suggested that some consumers remained dissatisfied with current switching methods, and that consumers placed significant value on likely reduction in time and difficulties offered by our proposed Auto-Switch reform.

Double paying after the switch has taken place

3.7 Our May 2017 consultation set out our provisional view that consumers face both unnecessary difficulties and costs when they switch – under either PAC or C&R arrangements – because they are required to pay notice after the switch has taken place. For example, we set out that:

• Some consumers double pay because they pay for their old service and their new service at the same time. PAC switchers continue to pay even though their old service has been deactivated. We also set out that although C&R switchers can continue to use their old service, there is little evidence that they always wish to do so.43

• Some consumers try to avoid or minimise double payments by deferring their switch (whether via PAC or C&R arrangements). However, we said that avoiding double payment can be difficult because a consumer would have to have a good understanding of their current provider’s notice period policy and actual charging practices. We said that avoiding double payment may result in an unnecessary delay of their switch date.

3.8 We also provisionally concluded that some consumers are deterred from switching because of their perception that there is a risk of double paying.

Loss of service while switching provider

3.9 Finally, our consultation set out that consumers switching provider may suffer harm where there is a break in service during the switch, for example as a result of a porting process failure or difficulties coordinating the end of the old service with the start of the new service.

3.10 We provisionally concluded that loss of service in a switching context is an issue for a significant number of mobile switchers under both PAC and C&R switching routes. We also set out our view that concerns about loss of service may deter switching.

3.11 We said that we particularly regarded any extended service interruptions of a day or more as likely to be especially harmful.

43 This is discussed further in paragraphs 3.85 to 3.90


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Stakeholder responses on consumer harm

General views

3.12 In Section 2 we explained that consumer groups and individual respondents generally agreed with our assessment of consumer harms arising from the current switching arrangements, but that responses from mobile providers were mixed.

3.13 In particular, [], [], CCP/ACOD, SSE and Three, as well as a number of individual respondents, agreed with our views.

3.14 However, several mobile providers criticised our harm analysis:

• BT/EE said that our research showed only a small minority of switchers indicated they had issues when switching, and highlighted that Ofcom’s own complaints data show very small numbers of complaints regarding switching, with a downward trend over time, indicating that the process is working better for consumers. They said that this is also reflected in EE’s complaints data on switching.44

• O2 said that the current PAC process works well for most consumers, and that customer satisfaction is high, mobile switching prevalent, complaint levels low, and mobile compares favourably to fixed markets, where Ofcom has already made interventions in the switching process. O2 said that Ofcom relied too heavily on its BDRC research as evidence and that Ofcom had dismissed broader indicators of satisfaction in the market.45

• Virgin said that, while it had not reviewed our revised estimates of harm in detail, in their view our updated analysis strengthened the evidence that the current system works well for the clear majority of consumers.46

• Vodafone also said our BDRC 2017 research showed that there were very few consumers not satisfied by the current process, and that 86% reported that they were satisfied.47

3.15 [] specifically disagreed with our view that harms to SMEs are similar to those suffered by residential consumers. It said that while this may be true for sole proprietors or businesses with a handful of employees, this is not true for typical businesses that would be covered by Ofcom’s proposals. It also highlighted that many residential packages only allow customers to take up to four numbers, and that those with over four numbers would behave differently and have different needs from residential consumers.48

3.16 Some stakeholders argued that our analysis did not go far enough and said we had not included all the harms caused by existing processes:

44 BT/EE May 2017 consultation response §25 and §30-§34. 45 O2 May 2017 consultation response §21-§23 46 Virgin May 2017 consultation response §21 and §23 47 Vodafone May 2017 consultation response pages 14-16 48 [] May 2017 consultation response, []

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• [] said that we had not considered barriers to switching from the wider research journey, such as access to information or the impact of differing contract lengths in bundles.49

• Three said that we had not considered the harm to consumers and to competition in general from providers being able to offer discount deals to consumers trying to switch in order to retain them as customers (referred to as ‘reactive save’).50

Stakeholder views on unnecessary time spent and difficulty encountered while progressing a switch

3.17 Many stakeholders agreed with our view that consumers face harm from unnecessary time spent and difficulty encountered progressing a switch. [] and Three agreed that we were correct to identify this as a source of harm.51 Individual respondents also agreed with our assessment, with one commenting that the need to call their existing provider is ‘unnecessary time’ and leads to ‘emotional duress’.52 Others described the current process as ‘a headache’, and said providers wasting time could lead to customers being on hold for up to 2 hours.53

3.18 In addition, [] said that our analysis was in line with the feedback they received, which suggested there are problems with offices not being open 24/7, call waiting times being too long and customers not being given their PACs immediately due to retention activity.54

3.19 A number of mobile providers criticised our harm assessment. In particular BT/EE, O2, Virgin and Vodafone disagreed that consumers face unnecessary time and difficulties when switching:55

• Vodafone and Virgin said that the research showed that consumers were more likely to identify things they liked than disliked about the switching process, and that many of those who disliked the process could not specify a reason why they disliked it.56

• Virgin said that our BDRC 2017 evidence showed that people were more satisfied with phone based PAC and cancellation requests, in comparison to other routes, and that people who requested their PAC by phone were less likely than those using other methods to say they felt it was a ‘sales pitch’.57

49 [] May 2017 consultation response [] 50 Three May 2017 consultation response pages 4-8 and page 18. 51 [] May 2017 consultation response [], and Three May 2017 consultation response page 18 52 Individual respondents May 2017 consultation responses, page 1 53 Individual respondents May 2017 consultation responses, pages 3-4 54 [] May 2017 consultation response [] 55 Many of these points have previously been raised in response to our March and July 2016 consultations. 56 Virgin May 2017 consultation response §23, and Vodafone May 2017 consultation response pages 14-15 57 Virgin May 2017 consultation response §24-§25.

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• BT/EE and O2 argued that it was invalid to compare our evidence on the average length of calls which resulted in a successful PAC request (7.7 minutes)58 with []’s IVR59 system which takes 97 seconds, as call times include genuinely necessary steps such as the provision of important information about the switch (such as outstanding charges) and authentication of the customer.60

3.20 BT/EE submitted that in the case of C&R switchers not porting their number, the fact that in 20% of cases this was due to the old or new provider telling them they could not do so, is not a reason for regulatory reform. It said this was a breach of Ofcom rules which would be better addressed through an enforcement programme.61

Stakeholder views on double paying

3.21 Most stakeholders continued to agree with our assessment that double paying is a harm, and [], Three, CCP/ACOD, and [] agreed it is a harm arising from switching arrangements.62

3.22 [] said that an average bill overlap of 13-20 days equated to around a £20 surcharge for switching, which could go some way to offset the benefit of switching in the first place. It also said that avoiding double paying is not easy for consumers. [] added that a consumer does not have a choice about whether to agree to notice periods in order to get a mobile connection.63

3.23 The CCP/ACOD argued that consumers should not have to pay twice for a service, nor should they have to defer the start of a new service to avoid this. It said they could see no justification for the retention of a notice period once the service has been deactivated.64

3.24 Other providers argued that, while double paying may constitute a harm, this is independent of switching and so could not be identified as a harm arising from current mobile switching arrangements. O2 said double paying was a function of contractual notice periods and not part of the switching process itself.65 BT/EE said that double paying was separate from the switching process, and should be addressed separately.66

58 This is set out in §3.42 of the May 2017 consultation. We recognise that some of the calls related to switchers who actively wanted a save conversation with their losing provider, which would therefore be lengthier in nature. We further note in this context uSwitch’s response to our March 2016 consultation, in which they quoted their own research findings that it takes an average of 25 minutes’ worth of phone conversations to go through the switching process for mobile. 59 This is an automated telephony system that picks up calls, interacts with callers and routes calls to a customer service agent. 60 BT/EE May 2017 consultation response §26, O2 May 2017 consultation response §119-§121 61 BT/EE May 2017 consultation response §29 62 [] May 2017 consultation response [], Three May 2017 consultation response page 18, CCP/ACOD May 2017 consultation response page 2, [] May 2017 consultation response [] 63 [] May 2017 consultation response [] 64 CCP/ACOD May 2017 consultation response page 2 65 O2 May 2017 consultation response §73 66 BT/EE May 2017 consultation response §35. BT/EE raised this point in response to previous consultations.

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3.25 BT/EE also said that in the case of C&R switchers, and contrary to our conclusions, the majority benefit from contract overlap. It said that contract overlap does not indicate that there are issues with switching arrangements for C&R switchers.67

3.26 BT/EE and Virgin also said that where consumers wish to avoid double payment, it is possible for them to do so.68

3.27 Virgin continued to disagree with our view that double paying as a result of notice periods constitutes a harm.69 It said that:

• Notice periods are legitimate charges and are voluntarily entered into by consumers. It argued that there are many legitimate charges consumers may not like, but this does not mean they should be prohibited by the regulator.

• Consumers not being aware of their notice period at the time of a switch and incurring double payment as a result should not be identified as a harm, as long as the obligation to provide this information at the start and end of the contract is met.

3.28 Virgin also said that Ofcom had not provided robust data on the likely increase to switching numbers following a ban on notice periods, meaning we had not considered the likely impacts on the market of our reforms, which further weakens our justification for intervention.70

3.29 Furthermore, Virgin said that Ofcom’s proposals were going further than consumer law and argued that Ofcom should be seeking to align its position with UK consumer law rather than broadening its powers.71

Stakeholder views on loss of service

3.30 Several respondents agreed with our views on consumer harm arising from the loss of service that can occur when consumers switch mobile provider, including [], [], and Three.72

3.31 In particular, [] said it strongly believed that reforming the porting process should address loss of service, and said 85% of the complaints they received about porting related to delayed or failed ports. It said the average time to resolve this was 9 days. However, it added that loss of service of less than a day should also be addressed, and this can cause emotional distress and inconvenience, as well as having potential safety concerns (such as a lack of access to emergency numbers) and financial implications for businesses.

67 BT/EE May 2017 consultation response §39-§41 and §106 68 BT/EE May 2017 consultation response §36, and Virgin May 2017 consultation response §10. This point was raised in response to our March and July 2017 consultations. 69 Virgin May 2017 consultation response §9-§10. Virgin raised this point previously in response to our March and July 2017 consultations. 70 Virgin May 2017 consultation response §9 71 Virgin May 2017 consultation response §12 72 [] May 2017 consultation response [], [] May 2017 consultation response [], and Three May 2017 consultation response page 18.

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3.32 Other stakeholders did not disagree with our assessment that loss of service can lead to consumer harm but questioned the degree to which both loss of service and harm occur and said this was low. For example, Vodafone highlighted that only 2% of ports take longer than a day,73 and as such it considered that incidents of loss of service, and in particular long periods of loss of service likely to cause harm, are extremally limited. They added that mobile retailers provide compensation for consumers when they experience service loss.74

3.33 BT, O2, Vodafone and Virgin highlighted that the Mobile Number Portability Operator Steering Group (‘the OSG’) have already committed to addressing loss of service as a result of porting.75 In their view, this would reduce loss of service and therefore harm.

3.34 BT also pointed out there could be many causes of a perceived loss of service, and that this could cover genuine loss of service arising out of timing differences when providers transfer files between them at different times of day. It suggested that perceived loss of service could be minimised further if consumers are made fully aware of the actions they should take on the day of the port, for instance unlocking the handset or using the temporary number given to them.76

Conclusions on consumer harm

3.35 We have considered the views of respondents to our consultation in detail. Having done so, our judgment is that current switching arrangements can cause harm to a substantial number of consumers that do switch and can discourage others from switching at all. This applies to both residential consumers as well as businesses.

3.36 We set out below our final views on current mobile switching arrangements and consumer harm due to:

• unnecessary time spent and difficulties encountered when progressing a switch; • double paying while switching provider, or delay and unnecessary effort arising from

requirements to pay out notice periods that extend after the switch has taken place; and

• loss of service while switching provider.

Current mobile switching arrangements work well for many consumers, but not for all

3.37 We disagree with BT/EE, O2, Virgin and Vodafone’s views that the current process works well.

73 Vodafone May 2017 consultation response page 12 74 Vodafone May 2017 consultation response page 12 75 BT/EE May 2017 consultation response §43-§49, O2 May 2017 consultation response §71, Vodafone May 2017 consultation response page 12, and Virgin May 2017 consultation response §10 76 BT/EE May 2017 consultation response §42

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3.38 Evidence from the BDRC 2015 survey shows that although the majority of consumers rated the process for switching mobile providers as easy, a significant minority of consumers encountered difficulties. We acknowledge that our consumer research suggested the majority of mobile switchers (78%) subsequently rated the process of switching as either ‘very’ or ‘fairly’ easy,77 and that this was also reflected in other sources of evidence that we drew on.78 However, 38% of switchers (2.5 million consumers) said they had encountered at least one major difficulty, and 70% (4.6 million consumers) of switchers cited a minor difficulty.79 Our analysis also suggested that a quarter of switchers (equivalent to around 1.7 million mobile consumers) had experienced a major difficulty specifically related to the switching process.

3.39 These difficulties were also encountered by people who considered switching but did not do so. Thirty-seven percent of mobile consumers who had actively started looking for a new provider but not switched80 (around 0.7 million consumers) identified at least one difficulty related to the switching process as a major factor in deciding not to switch. We note that, in addition, 15% of those who had not switched or considered switching81

(equivalent to around 5.9 million consumers) said that process concerns were the main reason they didn’t switch or consider switching.82 This is a significant number of consumers.

3.40 Our BDRC 2017 research also explored consumers’ views on our proposed core process reforms, and the extent to which they would be likely to use a new switching process. A majority of both previous PAC switchers and C&R switchers reported interest in using Auto-Switch (text and online routes), rather than the way they switched previously.83 In our view, this is also a strong indication that there are problems with current switching processes.

3.41 We note that some stakeholders continue to argue that current arrangements work well as Ofcom receives low numbers of complaints about mobile switching, and that these are lower than complaints about fixed and broadband services. We note that Ofcom received an average of 73 complaints a month about mobile switching in the year to October 2017, and that over half of these complaints related to difficulties requesting or obtaining a

77 BDRC 2015 consumer research – see: BDRC 2015 and BDRC 2017 research findings for switchers are based on those who switched in the last 18 months, unless otherwise stated. 78 For instance, the Switching Tracker 2016 found that 94% of mobile switchers said that switching was either ‘fairly’ or ‘very’ easy. 79 We place more weight on the prompted responses than the headline figures on ease of switching given evidence from our Diary Research that respondents who noted difficulties during the switch did not always reflect these when asked, after the event. To counter any concerns that issues may have been identified solely because they were prompted, we have taken the conservative approach of focusing principally on issues reported as ‘major’. (Respondents were asked, on the basis of a list of possible difficulties or factors, whether any may have been ‘major’ or ‘minor’). 80 We refer to such consumers as ‘considerers’ in the remainder of this document. BDRC 2015 research findings for considerers are based on those who considered switching in the last 12 months. 81 We refer to such consumers as ‘inactive consumers’ in the remainder of this document 82 Analysis of difficulties among this group is focused on the ‘main’ reason only. 83 80% of PAC switchers and 73% of C&R switchers stated that they definitely or probably would use the Auto-Switch process compared to the way they switched previously. BDRC 2017 slides 56 and 74.

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PAC.84 While this is a slight decline from the average of 80 complaints a month in 2016, we continue to view these complaint levels, in combination with the evidence of difficulties with switching we have identified, as material. In addition, complaints to Ofcom do not reflect the overall scale of the problem, as this does not take account of complaints made directly to providers, nor does it take into consideration that some consumers who experience problems do not submit complaints.

3.42 We disagree with O2’s comments that we rely too heavily on BDRC data and dismiss broader indicators of satisfaction in the market. As we said in our May 2017 consultation, we have taken into account other sources of evidence, including Ofcom’s Switching Tracker, other consumer research, data from providers and complaints data, as well as our detailed quantitative BDRC consumer research.85 In our judgment, this body of evidence indicates that some consumers are experiencing harm as a result of current switching arrangements.

The harm suffered by consumers also applies to SMEs

3.43 We note []’s argument that SMEs do not suffer similar harms to those experienced by residential consumers and that they do not behave like residential consumers.

3.44 We recognise that there are business customers who are likely to have more complex needs than residential consumers when purchasing and switching mobile and other communications services. However, our analysis found that both residential and business customers experienced harm when switching or considering switching. We found that around a fifth of all SMEs (as well as a fifth of SMEs who specifically take business tariffs) said they experienced at least one of the following difficulties when switching under current arrangements:

• process took longer than expected; • existing provider persuasion to stay; • difficulty contacting provider to cancel services; and/or • difficulty getting a PAC from their existing provider.86

3.45 Many SMEs behave like residential consumers. For example, around 44% of all SMEs taking mobile services are on residential mobile tariffs.

Harms not addressed by our analysis

3.46 We note points made by [] and Three that there are additional harms that consumers suffer when switching mobile providers.

3.47 We have considered the points raised carefully, but in our view, these lie outside the scope of this work on reforming mobile switching arrangements. Ofcom’s work on consumer

84 Analysis of complaints to Ofcom’s Consumer Contact Team between November 2016 and October 2017. 85 These sources of evidence are set out in full in Section 2, footnote 22. 86 SME Tracker 2016, analysis based on those who only switched their mobile service. 20% relates to the net aggregate of cited reasons.


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engagement is specifically looking at the issues raised by [] on additional barriers to consumer switching engagement.87

3.48 On Three’s submission that we have not considered the harm to consumers and competition from reactive save, the harms we have identified, specifically in relation to time and difficulties contacting the losing provider, includes unwanted persuasion to stay and that this can exacerbate switching difficulties. This is discussed in paragraphs 3.63 to 3.66 below. We also consider reactive save further in paragraphs 4.95 to 4.101.

Consumers suffer harm from unnecessary time spent and difficulties encountered when progressing a switch

3.49 We have considered stakeholder responses carefully and our view remains that current switching processes can result in unnecessary time spent and difficulties encountered by some consumers when switching mobile provider.

3.50 Our BDRC 2015 research found that 23% of switchers each year reported they had encountered a major difficulty when switching.88 Our BDRC 2017 research also suggested that a significant minority (16%) were dissatisfied with their method of requesting a PAC, and a similar proportion (14%) were dissatisfied with their method of cancellation.89

3.51 We found that both the above difficulties could also involve consumers encountering unwanted persuasion to remain.

3.52 As set out in paragraph 3.44 above, around a fifth of SME switchers (equivalent to around 100,000 SMEs a year) experienced process related difficulties when switching, which were similar to those experienced by residential consumers.

3.53 We note the comments made by BT/EE, O2, Virgin and Vodafone that consumers who disliked the process could not name what they disliked about it. However, we disagree and note from our BDRC 201790 that:

• 57% of switchers dissatisfied with the method they used for requesting a PAC named something they disliked about the process, including 16% who said the process was too long/longer than expected; 91 and

87 https://www.ofcom.org.uk/__data/assets/pdf_file/0014/104441/call-inputs-consumer-engagement-communications.pdf 88 BDRC 2015 bespoke analysis. 89 BDRC 2017 slides 27 and 32. 90 Following the publication of our May 2017 consultation, we also updated our BDRC 2017 research after identifying a data processing error in the original analysis. This error resulted in some open-ended responses not being pulled through to the final data. The impact was an uplift in negative experiences of PAC requests and cancellations among those who contacted by phone compared to all contacts, and among those who said they were dissatisfied with the process. Our ‘Mobile switching: Attitudes towards current and potential alternative processes’ slide pack was amended on our website in August 2017, and slides 30, 31, 35 and 36 were updated. The revised slide pack can be found here: https://www.ofcom.org.uk/__data/assets/pdf_file/0026/101996/Mobile-Switching-Research-2017-Attitudes-towards-current-and-potential-alternative-processes.pdf 91 BDRC 2017 slide 31, bespoke analysis

https://www.ofcom.org.uk/__data/assets/pdf_file/0014/104441/call-inputs-consumer-engagement-communications.pdfhttps://www.ofcom.org.uk/__data/assets/pdf_file/0014/104441/call-inputs-consumer-engagement-communications.pdfhttps://www.ofcom.org.uk/__data/assets/pdf_file/0026/101996/Mobile-Switching-Research-2017-Attitudes-towards-current-and-potential-alternative-processes.pdfhttps://www.ofcom.org.uk/__data/assets/pdf_file/0026/101996/Mobile-Switching-Research-2017-Attitudes-towards-current-and-potential-alternative-processes.pdf


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• 54% of switchers dissatisfied with the method they used to cancel their old service named something specific they disliked about it, including 14% who said the process was too long/longer than expected and 13% who cited provider persuasion to stay.92

3.54 We have found that time spent and difficulties encountered by switchers can take various forms:

• difficulties keeping phone numbers and/or obtaining a PAC; • consumer experiencing provider persuasion to stay; and • dissatisfaction with phone based routes to cancel/request a PAC.

Difficulties keeping phone numbers and/or obtaining a PAC

3.55 Consumers’ ability to keep their phone number when they switch is an important aspect of switching that should be an easy and straightforward process, not just because it is useful to maintain contact details, but also because numbers are becoming increasingly important as identifying information for other accounts.93 Difficulties keeping phone numbers are therefore likely to cause considerable harm, or deter people from switching altogether.

3.56 Our BDRC 2015 research found that 10% of switchers reported ‘keeping your phone number’ as a major difficulty (8% of PAC switchers and 14% of C&R switchers). It also found that time and difficulties obtaining the PAC during a switch can cause problems for consumers, in particular:

• While the majority (81%) of consumers who had requested a PAC said that they found it ‘easy’ to do so, 18% said they found it either ‘fairly’ or ‘very’ difficult.94 Two thirds of those who found it difficult said that the “conversation to get the code took too long”.95

• Difficulty obtaining a PAC was a major factor in the decision to stay with their current provider for around 10% of active considerers (around 0.2 million consumers).96

3.57 We found that difficulties with the PAC process can also prevent some consumers who wanted to port their number from doing so. Our BDRC 2017 research found that one in six (15%) C&R switchers said they ‘really wanted to’ or had a ‘mild preference’ for keeping or porting their mobile number, but ultimately did not.97, 98 Reasons cited for not porting their number included concerns and difficulties with the PAC process used to switch and port.

92 BDRC 2017 slide 36, bespoke analysis 93 For instance, Whatsapp and gmail accounts will often use mobile numbers as an identifying detail. 94 Based on BDRC 2015 slides 72 and 73 95 BDRC 2015 Slide 73 96 BDRC 2015 slide 92 97 BDRC 2017 slide 20. 7% said they ‘really wanted to keep number’ and 7% said they had a ‘mild preference for keeping their number’. 98 BDRC 2015 research also asked those switchers who had not ported their number whether they would have liked to. 14% of these said they “Ideally wanted to keep my number”. Cited reasons for switching but not keeping their number included because of problems with the PAC process. (BDRC 2015 slides 77 to 79). These findings are broadly consistent with the BDRC 2017 findings.


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3.58 Our BDRC 2017 research also revealed that of the C&R switchers who stated that they would definitely or probably use Auto-Switch, were it available, 86% of them said they would opt to keep their number.99 This suggests many consumers consider it easier to keep their number under Auto-Switch than the current process, and that many would choose to retain their mobile number if the process for doing so was made easier.

3.59 We also note findings for PAC users which showed that around four in five switchers who had previously switched using the PAC process said they would use Auto-Switch.

3.60 It is possible that these figures may over-state the degree to which switchers would use these processes in practice.100 Nevertheless, the results suggest high levels of interest in a process that does not require a conversation with the losing provider. Indeed, when consumers were asked why they would take up these options, responses appeared to be linked to consumers’ perceptions that these methods would be easier, quicker and less difficult, compared to current methods.101

3.61 We note BT’s comments that there are rules in place to ensure consumers should be able to keep their numbers and that any difficulties in doing so should be addressed through an enforcement programme.102 We agree that where a mobile provider behaves in ways which prevent consumers from porting their number, we would look to take enforcement action.

3.62 However, our research found that only a minority of C&R switchers who had wanted to change their number but did not do so, reported being told this by either the losing provider or the gaining provider.103 Instead there were other reasons for consumers experiencing difficulties in trying to port their number, and others being deterred from attempting to do so due to concerns about the process. For instance, the most common reasons cited for not keeping a number despite wanting to do so, were that it was easier to switch without keeping a number (32%) and that it was faster to switch without keeping a number (32%).104

99 BDRC 2017 slide 75. We note that some of them also stated they would “ideally” keep their number next time they switched (irrespective of availability of Auto-Switch), but note that there is uncertainty as to whether these respondents would port next time absent Auto-Switch as many of them had a preference for keeping their number last time, but they did not do so. 100 Although as we note in §5.29, there are also reasons why take-up may be understated, for example if gaining providers encourage new customers to use Auto-Switch. Please refer to Section 5 and Annex 7 for detailed discussion. 101 Please see May 2017 consultation page 74 Figures 11 - 13 102 General Condition 18 requires networks to provide number portability. In the revised General Conditions that will come into force on 1 October 2018, General Condition B3 requires networks to provide number portability. 103 Our BDRC 2015 research identified that of those C&R switchers who said they would have liked to keep their old number, 10% said their old provider said they couldn’t keep their number, and 10% said their new provider told them they couldn’t keep their number. BDRC 2015 slide 78 (multiple answers). 104 BDRC 2015 slide 78


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Persuasion to stay

3.63 Difficulty switching for some consumers can be exacerbated by providers seeking to persuade them not to switch. This can be a particular problem when consumers have to navigate this step to progress a switch.

3.64 We acknowledge that many consumers seek, and benefit from, contact with their old provider where this leads to a better deal. However, 7% of all switchers cited “your previous provider trying to persuade you to stay” as a major difficulty when switching.105

3.65 Our updated BDRC 2017 analysis shows that, those who requested their PAC/cancelled their service by phone, were more likely to say they were dissatisfied with pressure from their current provider to stay compared to all switchers who requested a PAC/cancelled.106 Eight percent of those who requested a PAC by phone and 12% of those who cancelled their old service by phone said that their current provider trying to persuade them to stay was something they disliked about the process, compared to 5% and 7% of those who used any method to request a PAC or cancel their service.107

3.66 In addition, we note research provided by Three, which found 61% of switchers who were offered a reactive save deal said they had made their final decision before starting the switching process, and that their previous provider could not reasonably have done anything to change their mind about switching. This suggests that for many consumers unwanted reactive save offers are an unnecessary difficulty of current switching arrangements.108

Difficulties contacting the old provider/cancelling the old service

3.67 A further difficulty encountered by consumers when switching, highlighted by both the 2015 and 2017 BDRC research, includes cancelling the old service and/or contacting the losing provider, under both PAC and C&R processes. For example, our BDRC 2015 research found that:

• 10% of switchers cited ‘cancelling their p

Documents

Statement: Decision on reforming the switching of …...Consumer switching Decision on reforming the switching of mobile communication services 2 Package of reforms 1. Introduction